Farming News Review - November 2007

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Policy issues CAP (etc.) support details/payments Grants Farm finance Product prices

Other crop news Other livestock news Inputs Marketing Miscellaneous

Policy issues

The European Parliament has voted to strengthen the controls on the approval and use of pesticides. However, some of the most potentially damaging aspects of the legislation have been dropped including an EU-wide 50 per cent cut in pesticide use over the next 10 years; the introduction of a pesticides tax to fund organic and low input systems; compulsory notification to neighbours prior to spraying; and compulsory buffer strips alongside watercourses. MEPs voted for mandatory sprayer testing every 5 years and a 50 per cent reduction in the use of pesticides classified as “very toxic” which would include diquat.
Under the Comprehensive Spending Review, Defra has committed to the further use of cost sharing mechanisms. The Government hopes to save £121 millions each year over a three year period by passing costs and responsibility for animal health and welfare to the livestock industry.

CAP (etc.) support details/payments

EU Agriculture Commissioner Mariann Fischer Boel wants a debate on capping Single Payments as part of the forthcoming CAP “Health Check”. The aim of the Commissioner is to redistribute CAP money from “the small number of large farms” to those considered to be most vulnerable. She has suggested a system where support is gradually reduced as payments get higher.
The area on which aid can be claimed for energy crops is being reduced by 30 per cent because the total eligible EU area of two million hectares has been exceeded. The European Commission is to consider whether the special aid is still appropriate.
EU agriculture ministers have agreed that all CAP expenditure is to be made public. All single farm payments will be published along with money paid under the rural development package and market supports.
France was the largest recipient of CAP funds in 2006 at £7 billions, Spain and Germany each received £4 billions, the UK received £3.5 billions.
The EU is to reclaim £100 millions of misspent CAP money with the main culprits being France and Italy. Great Britain has to repay £500,000.

Grants/regulations/legislation/environment

Compassion in World Farming has published research claiming that livestock production is responsible for 18 per cent of global greenhouse gas emissions, 4 per cent more than transport. With the number of farmed animals set to double by 2050, the CIWF has claimed “the only solution” is to reduce the consumption of animal produce by one-third over the next decade and two-thirds by 2050.
The Government, under Defra’s Agricultural Change and Environment Observatory, is to monitor the environmental impact of zero set-aside.
The Government has announced a new framework “Conserving Biodiversity – The UK Approach”, calling for greater co-operation from public, voluntary and business sectors in an attempt to meet biodiversity goals.
A Defra report has concluded that wild bird populations breeding on farmland have fallen to their lowest level since records began.
The Plunkett Foundation has secured £10 millions of funding through the National Lottery Changing Spaces initiative to support 650 sustainable community enterprises in order to help reconnect consumers with local producers.
The Farming and Wildlife Advisory Group in Scotland has declared independence from the UK-wide organisation.

Other matters of farm finance and tenure

The Discovering Lost Ways project, a Defra study costing £15 millions to identify and reinstate thousands of out-of-use public rights of way across England and Wales, could result in up to 7 million acres of agricultural land being taken out of production.
A survey carried out by Lantra has found that 45 per cent of agricultural and horticultural industries rely on migrant workers to meet the seasonal demands for labour. While a Home Office report “The economic and focal impact of immigration” claimed that seasonal needs in the sectors could be met entirely by EU workers, the NFU believes it fails to reflect the real situation and has called on the government to increase the availability of Seasonal Agricultural Workers Scheme permits.
The transport Secretary Ruth Kelly has relaxed rules limiting drivers’ hours in areas outside the foot-and-mouth disease Risk Area to allow movements of animals to and from markets.
Bank of Scotland research has shown that average farmland prices in Scotland increased by 47 per cent in the three years from 2003 to reach £2,737 per acre. However, it remains the area with the least expensive agricultural land in Great Britain. The most expensive area remains the south east where the average increased to £5,705 per acre.
According to the National Audit Office, women working full-time in agriculture experience greater pay equality than those in other sectors but still earn an average 11 per cent less than male colleagues.
The Scottish Tenant Farming Forum has launched a consultation on developing options to help new entrants get started in agriculture. The consultation is to collect views on what practical solutions can be offered to overcome the barriers to entry.
The National Federation of Young Farmers’ Clubs has entered into an agreement with Lantra to conduct research into the needs of young people in the land-based sector.

Product prices

A. Crops

Wheat and barley prices fell back over the course of the month. Among the contributing factors to this price drop were: profit-taking by futures traders, further weakening of the US Dollar, the approval by the EU of 0% compulsory set aside and initial estimates for the 2008 EU crop. Strategie-grains has reported that the cropped area for the plantings for the 2008 harvest in comparison with 2007 is up 5% for cereals and 10% for maize, but oilseed rape area is down 2%. Oilseed rape prices continue to climb, sitting almost £80/tonne above those in 2006, as the concerns of low vegetable oil stocks worldwide are proving to be true; further exacerbated as oilseed acreage is being replaced by more second and third wheats in response to the current market. Average prices in late October (£/tonne ex-farm): feed wheat 148, milling wheat 175; feed barley 142; oilseed rape 243; feed peas and beans 197.
Average potato prices, after an initial drop to £106/tonne, strengthened overall to £119/tonne this month, with the free market sitting £15 higher at £134/tonne. Many growers continue to focus on the finishing throes of harvest and, whilst poorer quality samples are coming to market, better quality potatoes are generally being stored. The market is expected to strengthen further in coming weeks to encourage more quality to the market-place. The season’s blight and weather difficulties together appear to have led to lower yields and higher levels of damaged or diseased tubers; there have been numerous reports from the Midlands of crops being written off unharvested due to the predicted level of wastage. Trade remains strong, as buyers have started to supplement existing contracts with free market purchases. Average prices now sit £10 higher than this time last year.
In late October, Desiree was achieving £130 to £170/tonne; quality samples of Estima with good baker content were commanding £160 to £170/tonne and King Edwards for packing were achieving between £160 and £200/tonne. Maris Piper are priced between £140 and £170/tonne for good samples.

B. Livestock
Restrictions from Foot-and-Mouth Disease have limited market information this month

As restrictions to trading and export continued this month, the average steer price has responded by being volatile; dropping from its opening position of 109p/kg lw down to 104p/kg at the start of the month, then strengthening mid month to 112p/kg only to close at 110p/kg lw; the same price as late October 2006.
UK lamb prices suffered further this month as bluetongue outbreaks were reported across the country. Trade started at 83p/kg lw and weakened further over the course of the month to close at just above 75p/kg lw, approximately 15p below prices a year earlier.
The average pig price crept back above 109p/kg dw over the course of the month, partly as a result of the negative press concerning beef and lamb. The pressure of increased feed prices, however, has been the main focus for producers, who continue to struggle. Prices by late September were 109.5p/kg dw; 1p/kg above prices at the same time in 2006.
The average farmgate milk price for August (reported in October) showed further improvement of just over 1ppl to 20.7 ppl; now 3ppl above the 2006 price. Price increases have not been forthcoming this month, but the announcement of merger talks between milk Link and First Milk could, if approved, lead to better prices for their joint membership which account for 20% of UK milk sales. Much of the milk quota price rises in August and September were reversed this month as the price continued to weaken from the opening position of 4.0ppl. Clean, 4% butterfat holdings were changing hands for 2.6 ppl in late October.

Other crop news

Despite predictions of a bumper crop, UK farmers harvested only 1.96 million tonnes of rapeseed in 2007 mainly due to poor harvest conditions and flooding. France and Germany have both reported harvests down by 7 per cent. World stocks are expected to fall by 18 million tonnes to 64.8 million tonnes. UK plantings are predicted to be down 10 per cent with plantings in Europe down 5-10 per cent.
The Energy Crops Scheme, which will provide funding for growers to establish miscanthus and short rotation crops such as willow, has opened for applications but no grants will be offered until the European Commission has approved the Rural Development Programme for England 2007-2013.
A case of potato brown rot has been confirmed for the first time ever in the Irish Republic.
EU legislation governing fusarium mycotoxin levels in cereals destined for human consumption could pose problems for the UK oat industry given that 30 per cent of samples tested by the Food Standards Agency and Home Grown Cereals Authority failed the “discussion limit” set by the EU.
The British Sprout Growers Association is forecasting a 15-20 per cent reduction in crop this season, largely due to the flooding and the poor weather in Lincolnshire this summer.
Wheat breeder RAGT Seeds and UK miller Dalmark Grain are seeking growers to grow a new milling wheat variety, with improved starch potential.
Cases have been recorded of the turnip sawfly which can devoliate turnips and devastate the crop.

Other livestock news

The number of confirmed bluetongue cases now exceeds 50 with incidences reported from Peterborough and Sevenoaks. The East Anglia and Kent – East Sussex Control Zone has become a single zone. Defra is resisting calls to create a single Control Zone in England having been advised by scientists that the increased risk of disease spread from creating a single zone would outweigh the benefits of the freedom of movement.
The 200 km foot-and-mouth Risk Area has been scrapped as no further cases have been confirmed since 30 September. A Restricted Zone has been created that contains the existing Surveillance Zone and an area where Defra is undertaking extra surveillance. Livestock movement restrictions apply to both Zones.
A meeting of the SCOFCAH food chain committee in Brussels agreed to increase the number of counties which can export meat to EU countries. Those south and east of a line from Dorset through Warwickshire to Essex remain excluded.
The Government has announced what has been described by farmers as an “insulting” £12.5 millions foot-and-mouth recovery package for England. The package includes a 30 per cent top-up to the Hill Farm Allowance; £1 million increase in the National Fallen Stock Scheme subsidy for farmers in the foot-and-mouth Risk Area; £1 million to the Arthur Rank Centre for farming charities; £2 millions for promoting and marketing lamb, beef and pork.
The Scottish Executive has announced a £25 millions aid package to help Scottish farmers recover from the foot-and-mouth crisis. The aid includes £19 millions for sheep farmers but is less than half the losses estimated by NFU Scotland.
The Welsh Assembly has allocated £6.75 millions to fund a light lamb disposal scheme for producers affected by foot-and-mouth restrictions. The scheme is expected to take in up to 300,000 lambs.
The NFU is preparing legal action on behalf of farmers as a result of the foot-and-mouth outbreak.
The Government’s chief scientist, Sir David King, having considered the Independent Scientific Group’s report on Bovine TB, believes that “a programme for the removal of badgers could make a significant contribution to the control of cattle TB … provided removal takes place alongside an effective programme of cattle controls.” Despite Sir David’s comments, Defra is likely to be cautious in its approach to any scheme involving culling.
Cases of bovine tuberculosis have increased by 18 per cent in the first 8 months of 2007 compared to the previous year. The west of England remains the worst hit area but the number of cases is increasing in west Wales.
The Veterinary Laboratories Agency is warning of an increased potential for liver fluke infections this winter as a result of the wet summer favouring the life cycle of the parasite involved.
The EU Standing Committee on the Food Chain and Animal Health has proposed a change of rules whereby animals which have been vaccinated can be exported from Bluetongue Zones to “clean” areas in other countries.
EU scientists have agreed to raise the age at which vertebral column has to be removed from cattle carcasses from 24 to 30 months.
Welsh Country Foods, based in Anglesey, has recalled batches of lamb meat and offal due to the possible presence of veterinary medicine residues.
A survey conducted by the British Pig Executive has concluded that more than 90 per cent of pig producers will seriously consider leaving the industry if the imbalance between feed costs and sales persists.
Morrisons has announced that all of the fresh pork sold in its stores will be sourced in the UK.
Sainsbury’s has agreed to increase prices of its pig products generating an estimated £5 millions for the pig industry.
A group of 34 farmers, supported by Prince Charles, has formed the Dartmoor Farmers’ Association to promote a premium red meat brand for quality native breeds grazed on Dartmoor.
A private storage aid scheme has been introduced by EU pigmeat market managers. Operators who store meat for a period of between three and five months may claim EU aid to cover storage costs.
Asda has announced “Beef Link”, an initiative aimed at increasing beef sales and has committed to acquire all its supplies from the UK and the Irish Republic.
EU Agriculture Commissioner Mariann Fischer Boel is expected to announce an increase of about three per cent in milk quotas with effect from next April.
The Milk for Cheese Value Equivalent for September reached 33.15ppl, more than 70 per cent above the figure for the previous year.
The Scottish Organic Milk Producers Association claims that demand for organic milk will increase by up to 90 million litres next year from a base of 375 million litres.

Inputs/Supply businesses

GrowHow UK is to close its fertiliser plant in Severnside, near Bristol.

Marketing

A report published by IGD suggests the online grocery market, currently valued at £2.4 billions, will reach £5 billions by 2012. In the past year online sales have risen by 30 per cent. While it still only represents 2 per cent of the total market, the rate of growth is 6 times traditional retailing methods.
Meanwhile the same report reveals that 43 per cent of shoppers believe that supermarkets could improve the support of the nation’s producers while over 25 per cent believe food should be totally natural with no science involved.
The Scottish Dairy Marketing Company has claimed its advertising campaign, which started four years ago, has led to a 4 per cent increase in consumption, reversing a decline of 17 per cent in the previous 10 years.
Asda is to launch an initiative in conjunction with Yorkshire Farmers’ Market whereby it will run in store farmers’ markets across its stores in Yorkshire.
The Horticultural Development Council has launched a new website to inspire and educate the public to eat seasonal fruit and vegetables.

Miscellaneous

Milk Link and First Milk are in “advanced discussions” with a view to a merger.
Supported by the Prince of Wales, the Prince’s Charities Foundation has raised over £600,000 to help farmers suffering from the spate of livestock diseases.
The Farming Help Partnership will distribute the funds via the Royal Agricultural Benevolent Institution, the ARC-Addington Fund and Farm Crisis Network.
The Yorkshire Agricultural Society has been given approval by Harrogate Borough Council to develop a £4.5 millions Regional Agricultural Centre.
The English Winter Fair, formerly the National Primestock Show and Sale, due to be held on November 17-18, has been cancelled.
Total Produce has bought the UK wholesale operations of The Greenery.